PUTRAJAYA: The retail prices of RON95 and diesel are expected to go up in Jan due to an increase in the price of crude oil in the world market this month, said Finance Ministry Strategic Communications director Datuk Lokman Noor Adam.
He said the retail price of RON95 and diesel were set according to the average prices of fuel in the world market for a month, as well as being influenced by the ringgit's movement against US dollar.
"The average (here) means the prices from day one to 31 (of the month) divided by 31 days. Not the global oil prices at the end of the month as understood by certain quarters.
"With the current strengthening of the US dollar against ringgit, the cost of purchasing crude oil will also increase. Hence, the surge of the retail fuel price in Malaysia," he said in a statement here today.
Lokman Noor said the retail prices of fuels in the country have been decided using the controlled flotation method since Dec 1, 2014, following a drop in global oil prices then, which saw prices being determined by the market on a monthly basis.
He said there are still many people who could not accept the fact that the government needs to discontinue giving the bulk of subsidies and help the people by distributing the subsidies to the right groups.
Lokman Noor said the previous bulk of subsidies given to the people meant that both the rich and the poor received the same amount of subsidy.
"For instance, in July 2014, we subsidised RM0.6843 for each litre of RON95. Unfortunately, rich people used the fuels in bigger quantities, which was far more than poor people.
"For example, the subsidy for poor people driving (Perodua) Kancil was only around RM16.29 when they filled their tanks to full with RON95.
"Whereas those in the middle class bracket, driving a Toyota Camry, spent RM150 for a full tank. The subsidy that the government has to pay to these groups would be RM48.87, a three-fold increase than the poor. Is this fair?" he asked.
Lokman Noor said based on a study by the Finance Ministry, the government spent 70 per cent of the fuel subsidy to help the rich, while the target group only enjoyed the remaining percentage of the subsidy, in the form of RON95 and diesel. - Bernama